Saturday, October 25, 2008

27/28 Of The 7th Lunar Cycle

10/25/08 27/28 Of The 7th Lunar Cycle

Nouriel Roubini: "Yesterday Thursday I gave a speech in London (see video below) arguing that markets were in sheer panic and becoming literally dysfunctional and unhinged. I also made the point that policy makers may soon be forced to close financial markets as the panic selling accelerates.

Indeed, we have now reached a point where fundamentals and long term valuation considerations do not matter any more for financial markets. There is a free fall as most investors are rapidly deleveraging and we are on the verge of a a capitulation collapse. What matters now is only flows - rather than stocks and fundamentals - and flows are unidirectional as everyone is selling and no one is buying as trying to buy equities is like catching a falling knife. There are no buyers in these dysfunctional markets, only sellers and panic is the ugly state of this destabilizing game...As I have argued for a while equity prices may have to fall another 30% based on fundamentals alone before they bottom out. Why so? In a severe two year US and global recession S&P 500 firms earnings per share (EPS) could realistically fall to $50 or $60. If P/E ratios fall to 12 this implies the S&P 500 index falling to a 600 to 720 range. If P/E ratios fall - as likely in a recession - to 10 then the S&P 500 index could fall as low as 500 to 600. So even based on fundamental factors alone there is another 30% or more downside risk to US equities; and now, on top of such fundamentals, thee is also an ugly and nasty panic-driven market dynamics at work."

There maybe some confusion. Capitulation and copulation are not kissing cousins. Then again, while capitulating one can get fu--ed.

The Financial Times: "The turmoil in the financial markets has taken hold of the strategically important trade in long-term interest rate derivatives, pushing rates to levels once thought to be a “mathematical impossibility”.

Such interest rate swaps are the most widely traded over-the-counter derivative and are crucially important for insurers, pension funds and other companies that need to fund liabilities decades into the future." In sum, swap spreads turn negative.

Oil fell sharply and traded below $65 a barrel Friday amid weakening global demand for crude -- despite a decision by the OPEC cartel to cut production quotas by 1.5 million barrels a day from next month.

Trading on Russia's RTS stock market was halted Friday for one hour after the dollar-denominated index fell 7.33% amid widespread sell-offs on global exchanges. S&P cut its outlook on Russia's long-term sovereign credit ratings to negative from stable Thursday, citing increasing costs from the government's bank rescue operations and rising capital outflows. Russia's economy is also being hit hard by the recent sharp drop in oil prices.

Denmark's central bank on Friday hiked its key lending rate and the interest rate for certificates and deposits to 5.5% from 5%. The move was the "result of continued intervention to support the Danish krone," the central bank said, in a statement.

The British economy shrank by 0.5% in the third quarter, the Office for National Statistics reported Friday, marking the first quarterly contraction in 16 years.

Purchasing managers indexes for the euro zone indicated Friday that activity in the manufacturing and services sectors contracted at a quicker pace in October. News reports said the PMI for euro-zone manufacturing fell to 41.3 in October from 45.0 in September, falling below expectations for a reading of 44.0. The services PMI slipped to 46.9 from 48.4 in September, slightly below the consensus forecast of 47.0. The composite PMI reading fell to 44.6 from 46.9, reports said.

A renewed round of risk aversion amid fears of a global recession sent the Japanese yen soaring against major currencies Friday, setting a 13-year high against the U.S. dollar and a nearly six-year high against the euro.

Japanese shares were pummeled Friday, sending the benchmark Nikkei 225 Average down to its lowest finish in more than five years, as investors dumped stocks across the board. The Nikkei finished slumped 9.6% to finish at 7,649.08, a closing level it hasn't seen since April 29, 2003.

East Asia leaders pledged to set up an $80 billion foreign-exchange reserve pool by mid-2009 to help reduce the effects of the global financial crisis, according to reports Friday. The agreement was reached by leaders of China, South Korea, Japan and the 10 nations comprising the Association of South East Asian Nations, or Asean, meeting in Beijing.

Global stocks tumbled to a new five-year low on Friday and demand for the relative safety of government bonds and low-yielding currencies soared as economic decline and corporate damage continued to grip investors.

MSCI's all-country world index was down 2.8 percent after earlier hitting a level not seen since August 2003. The dollar hit a two-year high against major currencies.

There’s also been a huge disconnect between the falling price of gold futures contracts and seemingly insatiable demand for gold bullion coins and bars from retail investors around the world. That suggests there may be plenty of the kind of fear that pushes gold prices higher waiting for the short-term selling to end. Meanwhile, in trading today, gold dropped below $700 an ounce for the first time in over a year, marking a huge retracement of the multi-year rally that saw the precious metal peak at an all-time high of over $1,000 back in March.

Rob Hanna: On Thursday, "the NYSE up issues accounted for less than 40% of the total issues traded. This only the 3rd time since 1970 that the up issues % was below 40% while the S&P 500 rose at least 1%."

Democrats have registered over 200,000 voters in PA since June 1. Their lead over Republicans statewide is 1.2 million, double the gap in 2004. This election "saw the biggest switch ever" from one party to another in Pennsylvania, says pollster Michael Young.

London’s FTSE 100 dropped below 4,000. Stocks in Korea dropped about 10%.

The Federal Reserve on Thursday said it had suffered a $2.7bn paper loss on the $29bn portfolio of toxic assets it took over from Bear Stearns in March as part of JPMorgan Chase’s government-brokered takeover of the stricken investment bank.
News of the unrealised losses, revealed in a filing that also showed that American Insurance Group has already used up three-quarters of a $123bn Fed loan.

Obama leads by 12 points in Ohio, 11 in Pennsylvania and 13 in Wisconsin. In Michigan, where McCain's campaign has pulled out, Obama's lead is 22 points. In Indiana, a strong red state, his lead is 10 points, larger than in other recent polls.

Quinnipiac University also released polls yesterday from Ohio, Pennsylvania and Florida that show Obama leading in all three. In these surveys, his lead in Pennsylvania is 13 points. In Ohio, which is a must-win for McCain, Obama's lead is 14 points.

"The Wall Street collapse has created a very bad headwind," Dick Wadhams, the Republican Party chairman in Colorado, said yesterday morning.

Microsoft expects "significant variability" in PC shipments for the rest of the fiscal year. The company is estimating growth of 8 to 12 percent, with "netbooks" representing perhaps 5 percentage points of growth. The company's online advertising revenue grew 15 percent in the quarter, but it has struggled to gain market share from search leader Google.

Brazil's Vale mining company on Thursday said profits soared 64 percent in the third quarter as production of iron ore, nickel, aluminum and other metals hit a record despite the global economic slowdown.

Net income reached US$4.8 billion, or US$0.94 per share, in the July-September period, up from US$2.9 billion, or US$0.60 a share, in the third quarter last year, the Rio de Janeiro-based company said. Net sales rose 49 percent to US$12.1 billion.

The cost of borrowing in dollars overnight in London rose as the increased likelihood of a global recession spurred banks to hoard cash even after policy makers pumped record amounts of the U.S. currency into financial markets.

The London interbank offered rate, or Libor, that banks charge for such loans climbed 7 basis points to 1.28 percent today, British Bankers' Association said. It gained for the first time in 10 days yesterday. The comparable rate for U.K. pounds jumped 19 basis points to 4.75 percent. The Libor-OIS spread, a measure of cash scarcity, widened by the most since Oct. 10.

``The level of activity in the money markets remains significantly below standard norms and subject to sporadic abnormalities that can only be a function of illiquidity,'' said Charles Diebel, head of European rates strategy at Nomura International Plc in London.

Autumn lunar moon influence panic lows have historically occurred on day 27/28 of the 7th lunar cycle.In fact there is a body of academic research showing that market crashes have often occurred on and around the 28th day of the seventh lunar month of the lunar year. For more astrologically challenged readers, by the way, that's October 24.

General Electric plans to test the Federal Reserve's Commercial Paper Funding Facility when it opens on Monday, October 27th.

According to AMG Data Services, including ETF activity, Equity funds report net cash inflows totaling $686 million in the week ended 10/22/08 with Domestic funds reporting net inflows of $499 million and Non-domestic funds reporting net inflows of $187 million;
Excluding ETF activity, Equity funds report net cash inflows totaling $225 million with Domestic funds reporting net inflows of $689 million and Non-domestic funds reporting net outflows totaling -$463 million;

Excluding ETF activity, more Domestic Equity funds report inflows (2868) than any week since 5/7/08;
Exchange Traded (Equity) funds report net inflows of $461 million with the largest flows:
-$1.571 Bil from the iShares Russell 2000 Index fund;
Excluding ETF activity International funds report net outflows of -$185 million as net outflows are reported from all Domestic and Emerging regions;
Excluding ETF activity Taxable Bond funds report net outflows totaling -$2.638 billion as net outflows are reported from all sectors;
Money Market funds report net cash inflows totaling $17.151 billion as General MM funds report net inflows totaling $5.718 Bil and Government MM funds report net inflows of $11.433 Bil.

Two-year note yields dropped 24 basis points to 1.38%. U.S. equity futures pointed to a sharply lower opening, reaching pre-specified limits that can't be broken until regular hours of trading. The Treasury rally extended to longer maturities, pushing 30-year bond yields to the lowest level on record, 3.89%. Interest-rate futures traders have fully priced in odds that the Federal Reserve will lower its target borrowing rate by a half percentage point to 1% by next week's meeting.

Peabody Energy Corp. said Friday that it doubled the size of its buyback program to $1 billion. "We have a backdrop of record earnings, strong cash flows and ample liquidity," said Chairman and Chief Executive Officer Gregory Boyce.

For the year, UST Inc affirms its adjusted non-GAAP diluted earnings per share target of $3.65, with a range of $3.60 to $3.70.

International-passenger air traffic fell 2.9% in September, while cargo traffic fell 7.7% compared to the same month last year, according to the International Air Transport Association.

For the full year, Ingersoll-Rand said it expects to earn $3.35 from $3.55 a share from its continuing operations, excluding items. Analysts were expecting, on average, fourth-quarter and full-year earnings of 74 cents and $3.45 a share, respectively.

Berton Averre: “To err is dysfunctional, to forgive co-dependent.”

XTO Energy said it plans to reduce its debt by about $1 billion in 2009. The Fort Worth, Texas natural gas producer said it's hedged approximately 70% of its expected natural gas production in 2009 at an equivalent price of $11 per million cubic feet equivalent, higher than the recent futures prices of $6.21. "Given these hedges and the current commodity strip pricing, XTO anticipates record cash flow and production volumes with the financial strength to reduce debt," said Bob R. Simpson, chairman and chief executive officer. "With our focus on delivering performance, particularly in these challenging times, we will continue to look for opportunities to increase our hedge position."

PNC to buy National City for $5.2 bln stock, $384 mln cash. PNC says it received a $7.7 billion investment from the government, under its $750 billion bailout plan. PNC's CEO sid $19.9 billion of losses on the National City portfolio will come in as write-downs at the time the acquisition closes.

YRC Worldwide said after the bell Thursday its third-quarter earnings fell 10 percent on sluggish demand and weak pricing. But excluding some sizable one-time items, the company said it would have posted a loss of 32 cents per share, compared with analysts' consensus estimate of a loss of 8 cents per share.

Sales of existing homes were 1.4% higher in September than they were a year earlier; it was the first year-on-year increase in nearly three years. The median sales price fell 9% in the past year to $191,600, the lowest since April 2004. Prices plunged 18.5% in the West region, driven by high levels of distressed sales.

Liz Claiborne Inc.slashed its profit forecast. Liz Claiborne shares dropped 4.3% to $6.99.

Mohamed El-Erian, co-CEO of bond management Pimco:"We're starting to see the end of this massive deleveraging process. Now, it's too early to declare a complete green light because the economy is weakening. And that's the thing we have to look at, the extent to which the real economy is coming under pressure."

Chrysler LLC will reduce additional white-collar jobs starting in November through voluntary retirements and salaried employee buyouts, the auto maker said Friday. Involuntary cuts will also be implemented by the end of December. Chrysler did not specify how many will be affected but the Wall Street Journal reported that 25% of white-collar jobs will be cut.

J.P. Morgan Chase's economics team on Friday said it cut its outlook for the U.S. and Western Europe to reflect a deeper recession. "Weak data, striking declines in October surveys and poor financial performance," prompted the investment bank to lower the average pace of growth for the two regions by a full percentage point for the third and fourth quarters. Economists led by Bruce Kasman lowered their views on the fourth-quarter U.S. growth rate to -4% from -2%.

Barack Obama is home today in Hawaii with his ailing grandmother rather than on the campaign trail because he fears she won't make it to Election Day.

In case you thought the VIX could not go higher. It skyrocketed in early Friday trading to 89.

How many professionals thought this was possible? Maybe one in a hundred. Sometimes history is not a guide.

Standard & Poor's Chief Investment Strategist Sam Stovall in a research note Friday said he sees the S&P 500 Index bottoming at 700. The blue-chip index was off 3% on Friday to about 880 in recent action.

The Dow Jones Industrial Average fell 312.30 points, or 3.6%, to 8,378.95, leaving the blue-chip index 5.3% lower for the week. The S&P 500 fell 31.34 points, or 3.5%, to 876.77, translating into a weekly loss of 6.8%. The Nasdaq Composite shed 51.88 points, or 3.2%, to finish at 1,552.03, off 9.3% from last Friday's close.

November crude closed at $64.15 per barrel Friday on the New York Mercantile Exchange, down $3.69, or 5.4%, for the session to lose 11.1% for the week. Gold for December delivery gained $9.80 to $724.50 an ounce on the Comex division of the New York Mercantile Exchange.

Friday, October 24, 2008


10/24/08 Crisis

Ryszard Kapuscinski : "When is a crisis reached? When questions arise that can't be answered."

Markets in Asia plunged in early trading Thursday. European markets recovered slightly at first, only to fall back. In the early electronic trading, S&P 500 futures fell 7.70 points. Dow Jones industrial average futures slipped 35 points, and Nasdaq 100 futures were down 12.25 points.

Claims for first-time unemployment benefits rose 15,000 to 478,000 in the week ended Oct. 18, the Labor Department said.The four-week average of continuing claims rose by 44,250 to 3.68 million, the highest in more than five years.

In September, there were more mass layoffs -- instances in which employers slashed 50 or more jobs at one time -- than in any month since September 2001, the Labor Department said yesterday. And nearly half a million Americans have filed new claims for unemployment benefits in each of the past four weeks, the highest rate of such claims since just after the terrorist attacks seven years ago. "The customers I've spoken to are all living under a sense of fear," said Paul Villella, chief executive of HireStrategy, a Reston company that matches employers and workers. "They have very limited visibility into the future and have a great degree of uncertainty, so they just want to sit steady and be conservative in hiring."

Things get worse for GM workers. General Motors plans to cut more jobs than it previously expected among its U.S. salaried and contract workforce, according to a letter GM sent to executives and obtained by The Wall Street Journal on Thursday. The automaker will also cut some benefits, including suspension of the stock-savings match and other reimbursement programs. In the letter, GM's Chief Executive Officer Rick Wagoner and Chief Operating Officer Fritz Henderson cited deteriorating business conditions and the global credit crisis for the actions.

Microsoft Corp. on Thursday posted a slight fiscal first-quarter profit gain and sales growth that topped Wall Street analysts' estimates. The company said net income for the quarter ended in September rose to $4.37 billion, or 48 cents a share, from $4.29 billion, or 46 cents a share in the same period a year earlier. Revenue rose 9% to $15.06 billion. Analysts on average had estimated Microsoft would post earnings of 47 cents a share for the quarter, and $14.8 billion in revenue, according to FactSet Research. Microsoft said that sales and earnings for the second quarter and full year would be slightly lower than consensus estimates due to the economic slowdown. But shares of the software giant still rose more than 1% in after hours trading.

Cooper Industries will cut 1,000 jobs and take a charge of $22 million in severance expenses in the fourth quarter.

Daimler , Hyundai Motor and Fiat added to the gloom facing the autos sector with bleak forecasts for next year, as the global financial crisis took its toll.

Some Bain Capital credit-investment funds that bought highly secured corporate loans have lost as much as 50%.

Credit Suisse confirmed it swung to a third-quarter loss as its investment bank suffered heavily from the market turmoil that marked much of the period. Credit Suisse Group reported a 1.26 billion Swiss franc ($1.08 billion) loss during the third quarter Thursday, blaming bad investments and the global financial turmoil, and the bank said it was working to further cut its exposure to toxic assets.

Chief executives at 175 of the biggest U.S. companies have seen the value of their equity in their own company decline by a cumulative $42.3 billion.

Sony has slashed its profit forecasts and risks falling into losses in the second half of this year unless the euro recovers against the yen.

Rio Tinto shares plunged as much as 16.3 per cent on the Australian Stock Exchange on Thursday, recording one of their single biggest intra-day fall since the October 1987 stock market crash.

The sharp fall followed a denial from Rio that it was in talks with BHP Billiton, its Anglo-American mining rival and hostile suitor, to negotiate a takeover deal.

Recent Gallup polls show Mr. McCain running far behind Senator Barack Obama among Hispanic voters nationwide, only 26 percent of whom favor the Republican. The possibility that Mr. McCain can duplicate George W. Bush’s performance among Latinos in 2004, when Republicans won 44 percent of the vote, now seems remote. Latinos cite the crisis in the economy as their biggest concern, trumping immigration and the social conservatism that Republicans thought would help expand Mr. McCain’s appeal among religious, family-oriented Hispanic voters.

Christian Science Monitor: "As Election Day approaches, Senator Obama’s lead over Republican rival Sen. John McCain is widening into double digits. Recent polls also show 91 percent of Americans say they are comfortable with the idea of having an African-American president. That contrasts with only 50 percent who say they’re comfortable with having a 72-year-old become president, as Senator McCain would be were he to win.

That is leading some political analysts to conclude that voters’ concerns about the economy and the country’s direction have trumped the race issue, at least for now."

The Chicago Tribune reports experts are counting on 2008 and 2009 to rival the 2001-02 recession, when 32 retailers filed for Chapter 11 bankruptcy, according to New Generations Research Inc., a Boston firm that compiles information for That period included filings from the likes of Crown Books, Frank's Nursery & Crafts and HomeLife.
"We have dropped a pebble in a well and haven't heard the bottom yet," said Howard Brod Brownstein, principal at HachmanHaysBrownstein Inc., a turnaround firm in Philadelphia, and the administrator who oversaw Montgomery Ward's bankruptcy in 2000.
"The best retailers are monitoring the health of their vendors and good vendors are looking hard at the creditworthiness of retailers. Everybody's at Defcon 3."
So far this year, 17 major retailers have filed for bankruptcy reorganization, up from seven in 2007 and six in 2006, according

"The credit crunch is putting on a brake at every level of supply," said Antoine Halff, deputy head of research at brokerage Fimat USA. "Levels of credit are evaporating, so producers and refiners are having a hard time selling--they want to make sure their customers are good for the money...Shippers - who bring tankers from the ports to consuming countries - are also seeing a reduction of available credit, with some of them going under as a result. . . [This is] leading to a scarcity of available capacity for shipping, "Halff added.

Gold fell to a 13-month low in London as the dollar strengthened and fund investors liquidated their holdings across most commodities. Platinum also declined. The euro fell to the lowest in almost two years against the dollar, while the pound traded near its lowest in more than five years. Gold has had a correlation of 0.62 to the euro-dollar exchange rate this year, up from 0.58 last year, Bloomberg data show. A figure of 1 would mean the two move in lockstep. Gold for immediate delivery fell as much as $10.53, or 1.4 percent, to $719.92 an ounce, the lowest since Sept. 18, 2007, and stood at $724.75 an ounce as of 10:48 a.m. in London. Gold futures for December dropped $10.70, or 1.5 percent, to $724.50 in electronic trading on the Comex division of the New York Mercantile Exchange.

Analysts led by Francisco Blanch at Merrill Lynch & Co. Inc. wrote in a research report that gold could reach $1,500 an ounce. They also predicted that oil would reach $150 a barrel.

In the research note released earlier this week, the analysts said “the unintended consequence of the ongoing financial bailout will be inflationary pressures to the commodity markets.” The analysts provided no timetable for their predictions.

Copper fell below $4,000 a metric ton for the first time since November 2005, nickel's the cheapest since August 2003 and zinc is the lowest since November 2004. The Bloomberg World Mining Index of 162 companies has lost $493 billion in value since the bankruptcy of Lehman Brothers Holdings Ltd. in September spurred the financial crisis worldwide.

Iran said OPEC should cut production by 2 million barrels a day to stem the slump in prices.

On Wednesday OPEC's Secretary General met with a Russian president for the first time.

The Canadian dollar had depreciated 15% in October. The Australian dollar lost 17% of its value in the third quarter.

Assets managed by hedge funds may shrink to $1.3 trillion within six months from about $1.7 trillion as investors withdraw their money amid declining returns, according to Credit Suisse Tremont Index LLC.

Union Pacific says its third-quarter earnings jumped 32 percent on higher prices and better productivity. The Omaha, Neb.-based railroad earned $703 million, or $1.38 per share, compared with $532 million, or $1 per share, in the year-ago quarter.

Ratings agency Standard & Poor's said Thursday it has dropped the outlook on Russia's long-term sovereign ratings to "negative" from "stable."

The credit agency said it expected further defaults among corporations and banks, as not all institutions will have access to government bail-out funds. It also noted its concerns that the government could run a budget deficit in 2009.

Barack Obama has expanded his national lead over Republican John McCain in the US presidential race to 10 points, according to a Reuters/C-SPAN/Zogby poll released on Wednesday.

Less than two weeks before the November 4 election, Obama made gains in Ohio while his Republican rival chipped away only slightly at the Democrat's edge in Florida and Pennsylvania, the survey by Quinnipiac University found.

The Quinnipiac poll showed Obama ahead of McCain in Florida by 49 to 44 percent, compared to a 51-43 percent lead in the last survey October 1, and in Pennsylvania Obama leading 53-40 percent, compared to 54-39 percent last time.

McCain lost ground in Ohio, where Obama leads 52-38 percent, expanding his lead of 50-42 percent at the beginning of this month.

"If these numbers hold up, he could win the biggest Democratic landslide since Lyndon Johnson in 1964," said Peter Brown, assistant director of the Quinnipiac University Polling Institute.

Alexis De Tocqueville : "The most dangerous moment for a bad government is when it begins to reform."

UPS Inc.'s third-quarter profit fell nearly 10 percent despite a rise in sales, the world's largest shipping carrier said Thursday as it warned that it faces more challenges ahead, job cuts may be on the horizon and the "scope and the size" of a deal it is working out to carry some packages for rival DHL could change.

U.S. FHFA home price index down 5.9% in past year.

Diamond Offshore increased its special dividend to $1.88 a share for the third quarter from $1.25 a share for the past four quarters. Analysts at Macquarie Research Equities (USA) said combined with the regular quarterly dividend of 12.5 cents a share, the payments equate and annualized yield of 12.42%. Both dividends are payable to shareholders of record on Nov. 3.

Natural-gas inventories rose by 70 billion cubic feet for the week ended Oct. 17, the U.S. Energy Department said Thursday. Analysts at Global Insight expected a climb of 80 billion. Total stocks now stand at 3.347 trillion cubic feet, down 77 billion cubic feet from the year-ago level but 93 billion cubic feet above the five-year average, the government data said. November natural gas was down 2.7% at $6.594 per million British thermal units on Globex.

Corporate short-term borrowing shrank by 4.1 percent, the sixth-straight weekly decline, according to the Federal Reserve.

The U.S. commercial paper market slumped $61.5 billion to a seasonally adjusted $1.45 trillion for the week ended Oct. 22, the lowest since April 2005, the Fed said today in Washington. Financial commercial paper contracted $45.5 billion to $559.4 billion. Rates on the highest-ranked 30-day commercial paper jumped 0.59 percentage point today to 2.51 percent, or 1.01 percentage point more than the Fed's target lending rate, according to yields offered by companies and compiled by Bloomberg. Before August 2007, the rates were about the same.

To cut costs, Janus Capital Management said it plans to reduce its workforce by 9%. Declining revenue and assets also forced investment firm AllianceBernstein to announce employee cuts earlier in the week.

Within the first two hours of Thursday's trading, the Dow had risen 275 points. Then a reversal set in and the Dow was down 115 points. Volatility continued as the word of the day.

Xerox Corp. will trim 3,000 jobs, or about 5% of its global workforce, over the next 6 months in response to a slowdown in orders.

Alcoa Inc. will reduce production at its Point Comfort, Texas, alumina refinery by 25% by the end of November. Alcoa said that aluminum prices have fallen dramatically over the past few months and that it is reviewing its highest cost operations. The company said that the workforce at Point Comfort will be "adjusted accordingly."

Renault said it's going to assess the consequences of the deterioration in market conditions as it issues its 2009 outlook. Third-quarter revenue fell 2.2% to 9.15 billion euros.

For the full year, Raytheon foresees earnings in the range of $3.95 to $4 a share, and 2009 earnings in the range of $4.45 to $4.60 a share.

Through the early Friday morning hours, markets in Asia were off anywhere from 9 to 11 percent, while European exchanges were falling between 7 and and nearly 10 percent. Prices for U.S. stock market futures contracts showed such steep declines that pre-market trading in the S&P 500 was temporarily halted, and both the Dow Jones industrial average and the Nasdaq were approaching those limits. All three pointed to opening losses above 6 percent, with the Dow pointed to drop by an initial 550 points.

Asian exporters like Samsung and Sony were reporting steep declines in profit, a result of declining demand in the developed world, the U.K. said its economy shrank 0.5 percent from July through September compared to the three previous months -- a sharper than expected contraction.

The Organization of Petroleum Exporting Countries, meanwhile, responded to falling oil prices and weakening demand by cutting output targets for its 11 members by 1.5 million barrels per day, or about 5 percent over the current 28.8 million barrels per day.

Qatari oil minister Abdullah bin Hamad al-Attiyah said the cartel was only responding to the fall in world demand, a fact that, coupled with the financial crisis, has upended the budgets of OPEC members.
"We hate to cut production, but we've been forced because nobody will buy it," he said. "We produce for somebody to buy...We can't produce and nobody buy it." Further cuts are possible, he said, "if the market has deteriorated" when OPEC next meets in December.
"Demand is collapsing," said Rafeal Ramirez, oil minister for Venezuela.
The new quotas will take effect in November.

Tuesday, October 21, 2008

Presidential Politics

10/22/08 Presidential Politics

With the current economic meltdown creating problems for Republicans, Democrat Barack Obama is focusing his final-stretch message of the presidential campaign on a rescue plan for battered middle-class households.

Two weeks before the Nov 4 vote, Mr Obama was holding a jobs summit on Tuesday in Florida with the Democratic governors of four battleground states as well as business leaders and economic experts.
The meeting comes a day after Mr Obama launched a major push with the help of former rival Hillary Rodham Clinton and other surrogates to win Florida.

Orders for British factory goods in the last three months fell at the fastest pace since 1999 on declines in domestic and foreign demand amid a global economic slowdown, the Confederation of British Industry said in its latest quarterly industrial trends survey Tuesday. Sixteen percent of manufacturers reported a rise in new orders while 46% reported a fall, for a balance of -30% -- the lowest reading since January 1999. A balance of -38% of firms saw falling domestic orders, the sharpest drop since 1992, while export orders produced a balance of -19%.

Standard & Poor's on Tuesday cut its expected 2008 dividend payment for the S&P 500 Index by nearly 3%. The lowered forecast represents a 1.2% increase in S&P 500 dividend payments from 2007, but that would be the lowest growth rate since 2001. "The prospects for dividends remain extremely cautious," said Howard Silverblatt, senior index analyst at S&P. Fourth-quarter payments are expected to fall 10%, the worst pullback since 1958, S&P said.

Caterpillar's net income slipped 6% to $868 million, or $1.39 a share in the third quarter, from $927 million, or $1.40 a year ago. Chief Executive Jim Owens called the higher material costs - which increased $442 million - "the most significant headwind we faced in the quarter." Caterpillar reaffirmed its full year 2008 earnings outlook of $6 a share and said its financial services unit continues to have good access to capital.

For the year, Lockheed Martin raised its earnings target range to $7.55 to $7.70 a share, from $7.45 to $7.60 a share.

3M Co. said Tuesday its third-quarter net income rose to $991 million, or $1.41 a share, from $960 million, or $1.32 a share, in the year-ago period. For the full year, the company forecast earnings in the range of $5.40 to $5.48 a share.

For 2008, Biogen expects adjusted earnings above $3.50 a share, representing growth consistent with its goal of 20% compounded annual growth through 2010.

Coach Inc., the largest U.S. seller of luxury leather goods, said Tuesday that its fiscal first-quarter profit dropped to $145.8 million from $154.8 million. The company's outlook for the holidays is tempered by the weak traffic trends in its North American stores. Coach lowered its fiscal year 2009 sales to a gain of 10% from a previous projection of 13% but kept its per-share profit forecast of $2.25.

U.S. Bancorp. said Tuesday that its third-quarter net profit fell 47% to $576 million, or 32 cents a share, from $1.1 billion, or 62 cents a share, a year earlier. Net charge offs in the third quarter were $498 million and the company said it expects that level to increase in the fourth quarter.

The London interbank offered rate, or Libor, for U.S. dollar loans fell to 3.83375% from 4.05875% on Monday, news reports said. Three-month sterling Libor fell to 6.085% from 6.11625%, while three-month euro Libor slipped to 4.95875% from 4.98625%.

DuPont cut to $3.25 to $3.30 a share excluding items, down from $3.45 to $3.55.

Pfizer Inc posted a higher-than-expected quarterly profit on Tuesday, as the world's largest drug maker better controlled costs and benefited from the weaker dollar.

Pfizer, whose shares rose 3 percent in premarket trading, said it earned $2.28 billion, or 34 cents per share.

That compared with $761 million, or 11 cents per share in the year-earlier period, when the company took a big charge to end its involvement with an inhaled insulin drug.

Rob Hanna: "Volume action continues to disappoint. I’d be surprised to see a reaction as negative as last week, but volume is suggesting that perhaps buying enthusiasm isn’t as strong as would appear based on price alone. A pullback may likely be in order in the next few days."

Volume action continues to disappoint. I’d be surprised to see a reaction as negative as last week, but volume is suggesting that perhaps buying enthusiasm isn’t as strong as would appear based on price alone. A pullback may likely be in order in the next few days.

NY Times: "As voters have gotten to know Senator Barack Obama, they have warmed up to him, with more than half, 53 percent, now saying they have a favorable impression of him and 33 percent saying they have an unfavorable view. But as voters have gotten to know Senator John McCain, they have not warmed, with only 36 percent of voters saying they view him favorably while 45 percent view him unfavorably."

The new survey shows Obama leading McCain by 53 percent to 44 percent among likely voters, little changed from a Post-ABC News poll released Oct. 13. Among all registered voters, Obama leads by 10 points, 52 percent to 42 percent. In all, the first round of the Post-ABC News tracking poll asked voters to evaluate the two candidates across 11 issues and attributes. Obama leads on all 11, with margins as high as 32 points on the question of who is the more optimistic of the two presidential hopefuls. He has double-digit leads on seven of the 11.

Nissan Motor Co. said Tuesday it would cut auto production at its two domestic plants due to sluggish demand in the United States.

Japan's third-biggest automaker will slash output by 28,000 units, mostly Infiniti luxury models, at its factory in Tochigi, north of Tokyo, Nissan spokeswoman Ikue Matsuura said. The production cut would last five months starting from November, she said.

"Our sales in the United States remained sluggish. We must adjust our output accordingly," the spokeswoman said.

Nissan also planned to cut production by 37,000 units, mostly the sport utility vehicles Murano and Rogue, at its plant in Fukuoka, southern Japan, from November to March next year, Matsuura said.

Nissan's sales in the United States dropped 37 percent year-on-year in September due to slowing demand as American consumers tightened their purse strings amid the deepening financial crisis.

The 25 richest Russians listed by Forbes have lost a combined $230 billion.

The US spends twice as much on healthcare per capita than other nations but still trails in access.

The Chicago Tribune poll found Obama with the support of 56 percent of Illinois voters, compared with 32 percent who said they are backing McCain.

The economy was by far the No. 1 concern of voters across the state. A total of 57 percent named it the top issue of the presidential race, with affordable health care second at 14 percent. Terrorism and the Iraq War were the top concerns for only a fraction of the voters.

Paccar said Tuesday that third-quarter earnings were $299 million, or 82 cents a share, compared to $302 million, or 81 cents a share, in the same period a year ago. "In these turbulent times, Paccar is experiencing lower truck demand in Europe, Mexico and Australia, and continued softness in the U.S. and Canada, which will reduce financial results in the fourth quarter of 2008 and into 2009." Chairman and CEO Mark Pigott said.

In early Tuesday morning trading, Gold for December delivery lost $11.9, or 1.5%, to $778.10 an ounce in early electronic trading. The dollar rose to the highest in 19 months against the euro.

Iran's oil minister says the Islamic republic, Russia and Qatar discussed the formation of an OPEC-style cartel of gas exporting countries.

Iranian Oil Minister Gholam Hossein Nozari says that the top three countries with natural gas reserves will "seriously pursue the formation of an organization of gas exporting countries.''

North Dakota will see record oil production this year from nearly 4,000 oil wells.

``What we're seeing is the domination of economic issues leading'' Hispanics to vote more Democratic this year, said Dario Moreno, director of the Metropolitan Center at Florida International University in Miami. ``Hispanic voters are 12 percent of Florida's electorate, and for the first time since the state started reporting registration by race or ethnicity, Democrats now outnumber Republicans among them by almost 68,000 registered voters, according to figures released Oct. 19 by Florida's secretary of state. Almost one in three Florida Hispanics aren't registered with either major party.

Tracinda said it plans to further reduce its holdings of Ford common stock, including the possible sale of all of its remaining 133.5 million shares, or 6% of the auto maker's outstanding shares, depending upon market conditions and available sales prices.

Trendwatch: " Researchers at Ohio State University have accidentally discovered a new solar cell material capable of absorbing all of the sun's visible light energy. The material is comprised of a hybrid of plastics, molybdenum and titanium. The team discovered it not only fluoresces (as most solar cells do), but also phosphoresces. Electrons in a phosphorescent state remain at a place where they can be "siphoned off" as electricity over 7 million times longer than those generated in a fluorescent state. This combination of materials also utilizes the entire visible spectrum of light energy, translating into a theoretical potential of almost 100% efficiency. Commercial products are still years away, but this foundational work may well pave the way for a truly renewable form of clean, global energy."

National City has big loss, to cut 4,000 jobs.

Roche reaffirmed its offer for California-based Genentech Inc., of which it already owns some 56 percent.

OPEC seaborne exports, excluding Ecuador, fell 900,000 barrels per day in the four weeks to October 5 with Gulf producers accounting for most of the shrinkage, Lloyd's Marine Intelligence Unit said on Tuesday.

Michelle Leder: "It’s no secret that San Diego is awash in foreclosures. Indeed, Realty Trac lists 18,885 bank-owned homes in the county and another 12,041 in pre-foreclosure. Given that kind of distressed supply, prices have fallen dramatically — about 30 percent, according to this report."

The Federal Reserve will help finance purchases of up to $600 billion in assets from money- market mutual funds roiled by redemptions from investors seeking the safety of government debt.

``The short-term debt markets have been under considerable strain in recent weeks as money market mutual funds and other investors have had difficulty selling assets to satisfy redemption requests,'' the Fed said in a statement released in Washington today. About $500 billion has flowed out of prime money-market funds since August, a central bank official said.

Freeport-McMoran said copper prices averaged $3.49 a pound during the third quarter, dropped to $2.89 at the end of the quarter, and this morning is $2.01.

The Chicago Fed said its National Activity Index was minus 2.57 in September versus a revised minus 1.61 in August, originally reported at minus 1.59, and the lowest since January 1982.

The index has been negative, indicating below-trend growth, since August 2007.

The Atlanta-Constitution: "The 44th president of the United States will take office in an uncertain and dangerous time for this country. The challenges we face both overseas and here at home are complex and unfamiliar, and the road ahead is likely to be very different from the road we have traveled to get here.

Leading the country in such a time will require someone of intellect, creativity, honesty and passion for those traits that have made America great. That person is U.S. Sen. Barack Obama."

The Suffolk University poll places Obama ahead, 51 percent to 42 percent in Ohio.

In mid-morning Tuesday trading, November crude fell $2.44, or 3.3%, to $71.81 per barrel Tuesday on Globex. The December contract will become the front-month contract at the end of the day's trading session on the New York Mercantile Exchange.

The dollar index, which tracks the U.S. unit against a basket of six major currrencies, was at 83.995, down from a high of 84.263 reached earlier. The euro was buying $1.3127, up from $1.3077 earlier.

November crude closed at $70.89 per barrel Tuesday on the New York Mercantile Exchange, down $3.36, or 4.5%. Gold for December delivery lost $22 to end at $768 an ounce on the Comex division of the New York Mercantile Exchange.

Argentine stocks sank Tuesday in anticipation of a plan by the government to nationalize the private pension funds system.

"While President Bush and Sen. McCain were ready to move heaven and earth to address the crisis on Wall Street, the president has failed so far to address the crisis on Main Street, and Sen. McCain has failed to fully acknowledge it," Obama said at a jobs summit his campaign staged in economically precarious and politically significant Florida.

Yahoo says it will layoff more than 1500 employees in the fourth quarter.

Apple Inc. said its profit jumped 26 percent in its fiscal fourth quarter as the newest iPhone outsold the market-leading BlackBerry from Research in Motion Ltd.

Despite the blockbuster performance, which sent Apple's shares soaring in after-hours trading, the company issued what it called "prudent" predictions for the current quarter, because of broader economic uncertainty.

The Depository Trust & Clearing Corporation said late Tuesday that it was still waiting for the final results of credit default swaps settlements related to Lehman Brothers debt.

Norfolk Southern Corp.reported late Tuesday third-quarter net income of $520 million, or $1.37 a share, up from $386 million, or 97 cents a share, a year earlier.

The Dow Jones Industrial Average fell 231.77 points, or 2.5%, to 9,033.66. The S&P 500 fell 30.35 points, or 3.1%, to 955.05, while the Nasdaq Composite dropped 73.35 points, or 4.1%, to finish at 1,696.68.

VMware Inc. reported a sharp jump in third-quarter earnings thanks mostly to strong growth in services revenue. For the quarter ended Sept. 30, the company reported earnings of $83.3 million, or 21 cents a share, compared to earnings of $64.7 million, or 18 cents a share, for the same period the previous year. Excluding the cost of stock options and other items, the company said it would have earned $93 million, or 24 cents a share, for the recent period. Revenue rose to $472.1 million from $357.8 million last year.

Shaken by the nation's worst banking crisis since World War I, the U.K. economy has likely entered a recession, said Mervyn King, governor of the Bank of England.

Democratic presidential candidate Barack Obama has opened up a 10-point lead over Republican opponent John McCain two weeks before the November 4 U.S. election, according to Wall Street Journal/NBC News poll released on Tuesday.

The poll found 52 percent of voters favor Obama compared with 42 percent for McCain, up from a 6-point Obama edge two weeks ago, the Wall Street Journal reported.

Samsung Electronics Ltd. said late Tuesday it has pulled its acquisition offer for chipmaker SanDisk Corp., citing a lack of progress in merger talks and "growing uncertainties" about SanDisk's business.

Palm Beach Post to lay off 300 workers.

Monday, October 20, 2008

Money Supply Growth

10/21/08 Money Supply Growth

George Ure: "The Fed's plan with Treasury to flood liquidity into the system seems to be showing up in the latest M-1 money figures out with little notice on Thursday of this week. If you flip over to the Fed's money stock measures report, H.6 it's called, and scroll down to Table 2, you can find that the four -week M-1 average has been 1,450-billion for the preliminary October 6 period - the most recent reported.

This compares with a four week average of 1,396.5-billion for the first full week in September.

That's a four week change of 3.83%...Why if that kind of thing were to keep up, we'd be staring at 57% inflation of the money supply....Is the change in 13-week averages a little more restrained? Why, of course: 16% annualized."

According to an Associated Press-Yahoo News poll of likely voters that was released Monday, 59 percent say they are personally happy, compared with 70 percent last month.

The magnitude of the financial meltdown and its impact on the overall economy is hitting people hard across the social and economic spectrum.Strikingly, one-third are worried about losing their jobs, half fret they will be unable to keep up with mortgage and credit card payments, and seven in 10 are anxious that their stocks and retirement investments are losing value, according to the poll.

Also, there is widespread distress about being able to afford unexpected medical expenses and children's college expenses, and having to postpone retirement because their savings have eroded, the survey found.

According to a Gallup Poll, 35% of Americans will spend less this year on Christmas gift than last year, whereas only 9% will spend more.

A new AP-Yahoo survey out today says the number of people who think the country is headed the right way on economic matters has dropped from 28% in September to just 15% in October. With McCain voting with Bush 90% of the time, why would McCain garner more than 16.5% of the popular vote?

“Right now, it’s an extremely important part of the puzzle,” Steve Sachs, a trader at Rydex Investments, said of the VIX. “It’s showing a huge amount of fear in the marketplace.”

“The next president will inherit a fiscal and economic mess of historic proportions,” said Senator Kent Conrad, Democrat of North Dakota and chairman of the Senate Budget Committee. “It will take years to dig our way out.”

The Oil Drum:

"1. Net imports from Canada haven't been rising very quickly. Net imports for 2008 YTD are in fact down about 2.5% from the 2007 value.

2. In order, our largest sources of net imports in 2008 are Canada, Saudi Arabia, Venezuela, Nigeria, Mexico, Iraq and Algeria.

3. Except for Canada and Mexico, all of the countries on the list are members of OPEC.

Looking at the EIA data underlying the graph, the next two smaller countries in terms of net imports are Angola and Russia. Clearly a substantial majority of our net imports come from OPEC or Russia. At one time, we were importing oil from Norway and Great Britain, but this is rapidly declining with the decline of oil from the North Sea."

Pacific Sunwear received an unsolicited $4.50 offer from Adrenalina, a retailer of extreme sports gear. The offer represents a premium of 24% over Pacific Sunwear's closing price of $3.62 on Oct. 17. Adrenalina's Chief Executive Ilia Lekach said the company's making the proposal public after Pacific Sunwear's Chief Executive Sally Frame Kasaks repeatedly declined Adrenalina's prior attempts to enter into discussions.

CVS expects to close its takeover of Longs (LDG) by the end of the month.

Google Inc. Chief Executive Eric Schmidt will hit the campaign trail this week on behalf of Democratic presidential candidate Barack Obama, signaling Mr. Schmidt's push for a greater voice in politics while giving the Obama campaign a boost from a highly desirable constituency.

Willie Brown: "The fact is, there are barely two weeks left in the campaign, and even if McCain can raise doubts about Obama, voters no longer see McCain and Palin as an acceptable alternative. Not with Palin being one heartbeat away from the presidency."

According to Bloomberg, the cost of protecting European corporate bonds from default rose to a record amid investor concern bankruptcies will soar as Deutsche Bank AG analysts forecast the worst economic slump since the Great Depression.

Credit-default swaps on the benchmark Markit iTraxx Crossover Index jumped 17 basis points to 780, according to JPMorgan Chase & Co. prices at 10:22 a.m. in London. Contracts on HeidelbergCement AG, Germany's biggest cement maker, climbed 80 to 845 and Paris-based Schneider Electric SA, the world's biggest maker of circuit breakers, increased 28 to 194, CMA Datavision prices show.

``The real deterioration in the economy is only just beginning,'' said Jim Reid, head of fundamental credit strategy at Deutsche Bank in London. ``The focus now will be on how earnings hold up in light of potentially the worst economic outlook we've had since the Great Depression.''

The London interbank offered rate, or Libor, that banks charge each other for three-month loans in dollars fell by the most in almost nine months, according to the British Bankers' Association.

It declined 36 basis points, or 0.36 percentage point, to 4.06 percent today, the biggest drop since Jan. 23, BBA data showed. The overnight rate for dollars fell 16 basis points to 1.51 percent, the lowest level since August 2004.

Average U.S. retail gasoline prices fell 3 cents a gallon to $2.92 a gallon in the last day, according to the Fuel Gauge Report from AAA. A month ago, gasoline sold for $3.78 a gallon. A year ago, gasoline sold at $2.82 a gallon.

Halliburton said a slowdown in drilling business appears to be contained to the U.S. currently. " In six polls conducted entirely since the VP debate was conducted on October 2nd, Palin's net favorability ratings are a -19 (the least Research 2000 tracker), a -9 (CBS/NYT), a +4 (Newsweek), a +7 (NBC/WSJ), a +8 (Rasmussen) and a +15 (CNN). Those ratings average out to a +1, which is pretty much a disaster for a candidate who's calling card is supposed to be her likability."

The economy is not in a "free fall," though recovery may be a year away, an economist at the Conference Board said Monday. The index of leading economic indicators rose 0.3% in September - the first gain since April - after dropping 0.9% in August, the Conference Board reported. "The extreme volatility in the financial market, and the near freeze-up of credit, will no doubt weaken the economy further," said Ken Goldstein, labor economist at the private research group. "But latest data suggest that conditions in the non-financial economy are not falling apart." Six of the 10 indicators that make up the index rose in September-- led by gains in the money supply and the difference between long- and short-term interest rates that reflected the mounting credit crisis.

Another shot of fiscal stimulus may be needed now to help the U.S. economy recover from what could be a protracted slowdown, Federal Reserve Chairman Ben Bernanke said Monday. "With the economy likely to be weak for several quarters, and with some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate," Bernanke said in prepared testimony to the House Budget Committee.

The Dow Jones Industrial Average gained 413.21 points, or 4.7%, to 9,265.43. The S&P 500 climbed 44.82 points, or 4.8%, to 985.37, while the Nasdaq Composite rose 58.74 points, or 3.4%, to 1,770.03.

Crude for November delivery closed up $2.40 at $74.25 a barrel on the New York Mercantile Exchange. Gold for December delivery gained $2.30, or 0.3%, to end at $790 an ounce on the Comex.

Rob Hanna: "Just a few quick observations this morning. Although the market rose last week, several measures of breadth and volatility remain at extreme levels suggesting more of a bounce is likely. For instance, the VIX made a new intraday high on Thursday and a new closing high on Friday. The CBI remains elevated at 13. Worden Bros. T2114 also remains extremely elevated. T2114 measures the number of stocks trading at least 1 standard deviation below their 40-day moving average. T2114 closed at over 90% on Friday despite the fact that the market rose last week. The current 90% reading still exceeds all other periods other than the Crash of ’87.
The market is looking to gap up this morning. The SPY is up over 2% a little before the open. Traders may recall my post from last Monday that suggested 2% gaps tend to pull back at some point over the following few days. It happened twice last week. The market has been extremely choppy. If this pattern of choppiness is to be broken there will need to be a strong move right from the start which utilizes the extreme conditions mentioned above to mount a sizable rally."

Toni Straka: "A net risk of $14 TRILLION (the net risk for derivatives according to the Bank for International Settlements) compares with the annual GDP of the USA. Nobody, absolutely nobody can afford this tab in the case of an unorderly unwinding of this market that is roughly 12 times the size of the global economy. I conclude a lot more paper promises will be burnt in the coming derivatives tsunami. As a reminder, most of these contracts have been moved off balance sheets into under capitalized subsidiaries that profited from the good rating of the parent company. But in case of a default it is this nasty, nasty huge notional amount that becomes a liability."

Matthew Simmons, the CEO of Simmons & Company International, expresses his alarm about gasoline stocks being the lowest in several decades and refinery production down following recent hurricanes. He warns that if there were a run on the "energy bank" by everyone topping off their gasoline tanks, the U.S. would be out of fuel in three days, and grocery shelves largely emptied in a week.

According to CNBC, Redstone used shares in CBS and Viacom as collateral for loans used to back expansion plans for his privately-held National Amusements, the Post said.

At issue is a covenant that requires National Amusements to maintain a certain debt-to-asset ratio, which it failed to do after shares of Viacom and CBS plunged on fears of an advertising slump.

Eaton Corp. is forecasting a U.S. economic recession starting in the fourth quarter, with a possible recovery beginning at the end of next year, Chief Executive Alexander Cutler said Monday.

The International Labour Organisation said that the global recession will put 20 million people out of work worldwide by the end of next year.

American Express said its earnings from continued operations came in at 74 cents a share in the third quarter, on revenue of $7.16 billion.

The credit card firm reported a profit of 90 cents a share on revenue of $6.945 billion last year.
Analysts polled by Thomson Reuters, on average, forecast earnings of 59 cents per share for the quarter.

Southern California home sales rose 65 percent in September, the biggest year-over-year increase in at least two decades, as buyers took advantage of foreclosures to purchase properties at discounted prices, MDA DataQuick said. Sales increased the most in areas where rising foreclosures drove down prices, MDA DataQuick said. Half of all the homes sold in Southern California last month had been foreclosed upon in the previous 12 months, up from 13 percent a year earlier. Prices fell in all six Southern California counties the company tracks, dropping the most in San Bernardino and Riverside, down 37 percent in each, followed by San Diego County, which was down 30 percent to a median $328,000.

Likely voters by 62 percent to 30 percent see Obama as more optimistic than McCain – all else equal, an attractive quality in a candidate, as Ronald Reagan demonstrated. And in a similar attribute, voters by a 17-point margin, 54-37 percent, see Obama has having the better personality and temperament for office.

Texas Instruments Inc. reported third-quarter net income of $563 million, or 43 cents a share, compared with a net profit of $758 million, or 52 cents a share, for the year-earlier period.

Barack Obama is cancelling nearly all his campaign events Thursday and Friday to fly to Hawaii to visit his suddenly ill 86-year-old grandmother.


10/20/08 OPEC

Median weekly earnings of the nation's 107.2 million full-time wage and salary workers were $720 in the third quarter of 2008. This was 3.6 percent higher than a year earlier, compared with a gain of 5.3 percent in the Consumer Price Index for All Urban Consumers (CPI-U) over the same period.

OPEC oil producers will cut oil supplies when they meet next week in Vienna and "the reduction must be significant," the group's president, Chakib Khelil, was quoted as saying on Saturday.

"There will be a reduction of the output and the reduction must be significant to restore the balance between supply and demand," Algerian state news agenyc APS quoted Khelil as telling reporters.

Iran's oil minister renewed his call for OPEC to cut production when it meets later this week, saying this was the only way to prevent crude prices falling further, the official IRNA news agency reported on Sunday.

South Korea announced measures Sunday to shore up its banks by guaranteeing their external debt and pumping more money into the financial system amid the global credit crisis.

The government said it will provide up to $100 billion to secure banks' maturing foreign currency debt for three years on loans taken out from Oct. 20 this year until June 30, 2009.

According to the NY Times, legal experts expected prosecutors would likely try to build fraud cases against Lehman executives by finding internal documents that contradicted public statements about the bank's status.

Cuba's oil reserves may be substantially larger than originally estimated, according to reports. Cuban energy officials have said that the country may have over 20 billion barrels of recoverable oil in its offshore fields in the Gulf of Mexico. If confirmed, such reserves would put Cuba among the world's top 20 oil-producing nations.

Ford independent directors Bond, Ollila resign from board.

The U.S. economic outlook for the next two quarters dimmed in September and foreclosure-driven declines in property values aided sales of existing homes, economists said before reports this week. The index of leading indicators fell 0.1 percent last month, according to the median estimate in a Bloomberg News survey ahead of a Conference Board report tomorrow.

``Elevated inventories and stubborn long-term rates should contribute to a third consecutive month of price declines for existing homes,'' said Maxwell Clarke, chief U.S. economist at IDEAglobal in New York.

Mike Burk: "Short lived rallies and late day sell offs suggest there are still a lot of people looking to get out of equities.

I expect the major indices to be Lower on Friday October 24 than they were on Friday October 17."

Tim Wood: "Since the original Dow theory warning that was sounded by the non-confirmation in October 2007 the Industrials have fallen 40%. The Transports have fallen nearly 30%. The S&P 500 has dropped over 45% and China's Shanghai Index has dropped by over 68%. So, yes, the Dow theory has spoken and it has proven correct....We have people trying to fix a problem that never even saw the problem coming and that are too ignorant to understand that they are part of the problem. They are why things have escalated to this point. Them trying to "fix" things is what got us this deep into this mess in the first place. What a joke this is. On top of the politicians we have the mainstream media that is clearly lost as well. Just today I heard on CNBC that we already need yet another stimulus package. Hello, didn't we just have the largest bailout in history less than 2-weeks ago? Haven't we seen countless bailouts from AIG to Freddie and Fannie to mention a few and already we "need another bailout." Please people! They just don't get it. Now we need a bailout or stimulus package every other week? It Ain't Gonna Work! Just as I have said since 2003 and into the 2007 top, all this is doing is making matters worse and I now think it is checkmate. As I see it, the market is again setting up for another potentially very nasty leg down."

Antal E. Fekete: "Thomas Szabo, calls the $700 billion bailout "putting lipstick on a pig", in the form of the Supplementary Financing Program. Szabo does not beat around the bush. He tells it as it is: The Federal Reserve is bankrupt, and the U.S. Treasury Department quietly rescued -- actually, took over -- the world's largest central bank on September 17, the day the Supplementary Financing Program was announced, which was nothing less than a clandestine federal bailout, a de facto takeover of the Federal Reserve. Szabo, who was a practicing auditor for 8 years, has gone on record in saying that the Fed, if it were an ordinary business enterprise, would have had to file for bankruptcy...Gold is the only financial asset that will survive any consolidation of bank balance sheets. Gold will not be netted out, like paper assets are, in case of mergers, acquisitions and takeovers. The rescue effort is administering one wrong medicine after another. Consolidation of banks through mergers and takeovers is not the way to go. Cutting interest rates is not the way to go. These measures make the condition of the patient worse, as they accelerate the process of destroying capital...

The long-term solution is the recapitalization of the banking system with gold. This means the issuance of new gold-denominated bank shares. It means mobilizing the U.S. gold reserves for the backing of the note and deposit liabilities of the Federal Reserve banks. The new shares of the recapitalized banks will then circulate in trading the old assets of the banks...The earth is shaking, the Debt Tower of Babel is toppling and, it will bury prosperity underneath the rubble. The Titanic of the once proud American banking system has collided with the iceberg of falling interest rates, and is sinking."

Colin Powell, the former Republican US secretary of state, endorsed Barack Obama, the Democratic presidential candidate, in the latest sign of fracturing unity in the Republican party ahead of next month’s election.

In the month of September Obama added 632,000 new donors. When 100,000 turn out for a rally in St. Louis and 75,000 in Kansas City on Saturday for Obama, you have a movement. It's more than just an election.

"John McCain is so out of touch with the struggles you are facing that he must be the first politician in history to call a tax cut for working people 'welfare,' " Obama said before the throng at the Gateway Arch in St. Louis.

Landry's Restaurants said Saturday night it had reached an amended deal with CEO Tilman Fertitta for Fertitta to buy the company.

Earlier this month, Landry's said Hurricane Ike and the global financial crisis meant Fertitta would lower his offer from $21 a share for the outstanding stock. He already owns 39 percent of the company.

The amended agreement provides for Fertitta to pay $13.50 per share, Landry's said in a statement, noting that the price is a 49 percent premium. The deal, the statement said, also calls for a special committee of Landry's board to actively look for other buyers who might be willing to give the company a better deal.

A report by the Wisconsin Advertising Project showed him doubling McCain's television buys from Sept. 28 to Oct. 4, the most recent dates available—including a 3-1 advantage in Florida, nearly 4-1 in Virginia and more than 8-1 in North Carolina.

Australian Prime Minister Kevin Rudd says his government has tried to act ``early and hard'' to ensure the nation's economic growth is sustained at a time when the global financial system faces one of its biggest challenges.

``I want to make sure that I can say to myself that it's been tough, it's been hard, nothing's guaranteed but we've done everything that was logically possible at the time to keep this economy as strong as possible,'' Rudd said during a nationally televised town hall-style meeting broadcast tonight on Seven Network Ltd.'s Channel Seven.

Europe is loosening "mark-to-market" accounting rules, which could make it easier for banks to avoid write-downs.

Yahoo is expected to exceed the 1,000 jobs that the cmpany announced it was cutting in January, say people familiar with the matter.

In early morning trading, crude for November delivery rose $1.90, or 2.6%, to $73.75 a barrel in early electronic trading. It climbed to as high as $74.28 earlier. Crude lost 8% last week. OPEC should order a "substantial" cut in oil output at Friday's emergency meeting in Vienna, Algerian Energy Minister and current OPEC president Chakib Khelil said Saturday, according to media reports. Gold futures rose in early Monday for the first time in eight sessions as traders picked up the precious metal after it slumped more than 8% last week. Gold for December delivery rose $10.10, or 1.3%, to $797.90 an ounce in early electronic trading. It rose to $811.80 overnight.

Hormel Foods Corp.cut its full-year 2008 forecast to a range of $2.03 to $2.09 a share from its prior range of $2.22 to $2.28 a share.

Weatherford International Ltd. said third-quarter income rose to $370.6 million, or 53 cents a share, from $292.7 million, or 42 cents a share in the year-ago period.

Excluding non-recurring items Halliburton said it made $687 million, or 76 cents a share.

The Reserve Bank of India lowered its base lending rate Monday, a surprise move that came days before a regularly scheduled meeting of its policy board. The central bank slashed its base lending rate by 1 percetage point to 8% with immediate effect, according to a statement published on its Website Monday. The rate cut was the first since 2004.

Exelon Corp. said late Sunday that it's offered to buy NRG Energy Inc. in an all-stock deal worth around $6.2 billion, or $26.43 a share, at Friday's closing prices. The offer is at an exchange rate of 0.485 Exelon shares for each NRG share and represents a 37% premium to Friday's close.

China's gross domestic product growth eased to 9% in the third quarter from 10.1% in the second, its slowest pace of expansion since the second quarter of 2003, according to data released by the National Bureau of Statistics Monday. Industrial production in September expanded 11.4%, down from 12.9% in August. The consumer price index rose 4.6% in September, down from 4.9% in August.

Merrill Lynch & Co Inc Chief Executive John Thain said he expects thousands of job cuts after the company is acquired by Bank of America Corp , Bloomberg News reported on Monday.

Circuit City Stores Inc. is considering closing at least 150 locations and slash thousands of jobs to avoid filing for Chapter 11 bankruptcy protection, a report said Monday.

In early Monday electronic trading, S&P 500 futures rose 26.10 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures climbed 199 points, and Nasdaq 100 futures added 37 points.

John Hussman: "According to Investors Intelligence, just 22.4% of investment advisors are presently bullish.... U.S. stocks are now undervalued....a long-term investment in stocks here is likely to substantially outperform a long-term investment in Treasury securities over time...The most expensive resource on Wall Street is short-term comfort. Investors who constantly seek comfort over the short-term ultimately give up a fortune over the long-term. In a market economy, the most reliable source of long-term gains is to provide scarce and useful resources to others when those resources are most in demand. At present, the most probable source of long-term returns is the willingness to provide liquidity (holding out willing bids at depressed prices in a panicked market), risk-bearing (taking on the market risk being liquidated by fearful or distressed sellers), and information (through the proper assessment of value). In my view, Buffett's willingness (and our own) to accept market risk here does all three."